Hang Seng Index, ASX 200, Nikkei 225: Asian Data and Pre-US CPI and Earnings Jitters

Highlights

• The Nikkei and ASX 200 had a positive session, while the Hang Seng Index ended Tuesday in negative territory.
• Overnight US economic indicators from Monday and the Asian economic calendar influenced buyer demand for riskier assets.
• On Wednesday, inflation numbers from Australia and labor market data from Japan need consideration.

Overview of the Tuesday Session

On Tuesday, the ASX 200 and Nikkei had a positive session. However, the Hang Seng Index ended the day in negative territory. Overnight US economic indicators from Monday influenced demand for riskier assets.

Weaker-than-expected US Consumer Inflation Expectation figures for December supported bets on a Q1 Fed rate cut. Consumer Expectations declined from 3.4% to 3.0% in December. Economists forecast a fall to 3.3%.

The US equity markets responded to the inflation numbers. On Monday, the Nasdaq Composite Index and S&P 500 rallied 2.20% and 1.41%, respectively. The Dow gained 0.58%. 10-year US Treasury yields declined by 0.44%, ending the Monday session at 4.032%.

However, the Asian economic calendar contributed to gains across the ASX 200 and the Nikkei.

Household spending unexpectedly fell in Japan, with inflation numbers for Tokyo softening. The numbers eased bets on a near-term Bank of Japan pivot from negative rates.

Better-than-expected retail sales figures from Australia also drew investor interest. Retail sales surged 2.0% in November after falling 0.4% in October.

Notably, hopes of stimulus from Beijing prevented another hefty loss for the Hang Seng Index.

US Economic Optimism and Fed Chatter

On Wednesday, US equity market moves from Tuesday could influence the Asian equity markets. The US RCM/TIPP Economic Optimism Index increased from 40 to 44.7 for January. However, the upbeat numbers were not enough to support another breakout session for the US equity markets.

Investors turned cautious before the US CPI Report and earnings season. On Tuesday, the Dow and S&P 500 declined by 0.42% and 0.15%, respectively. The Nasdaq Composite Index gained 0.09%.

The US session will set the tone for the Wednesday Asian session. However, investors must consider the Asian economic calendar on Wednesday.

Average cash earnings from Japan could influence bets on a Bank of Japan pivot from negative rates. The BoJ needs a pickup in wage growth to exit from negative rates. Economists forecast average cash earnings to increase by 1.5% year-over-year in November versus 1.5% in October.

For the ASX 200, the Australian Monthly CPI Indicator needs consideration. Hotter-than-expected inflation figures could leave an RBA rate hike on the table. A more hawkish RBA rate path projection could impact the appetite for ASX 200-listed stocks.

In the futures markets, the ASX 200 was down 12 points while the Nikkei was up 120 points respectively.

ASX 200

The ASX 200 gained 0.93% on Tuesday. Tech, mining, and bank stocks contributed to the positive session. The S&P ASX All Technology Index (XTX) rallied 1.73%.

Mining stocks steadied after a series of losses. Fortescue Metals Group Ltd. (FMG) rose by 1.12%. BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) ended the day up 0.64% and 0.29%, respectively.

However, the big four banks also had a positive session. National Australia Bank Ltd. (NAB) gained 1.28%, with Westpac Banking Corp. (WBC) rising by 0.96%. Commonwealth Bank of Australia (CBA) and ANZ Group Holdings Ltd (ANZ) ended the day with gains of 0.93% and 0.90%, respectively.

However, gold (XAU/USD) stocks had a mixed session, with oil stocks ending the day in negative territory. Northern Star Resources Ltd. (NST) gained 0.31%, while Evolution Mining Ltd. (EVN) closed the session flat. Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) declined by 0.42% and 0.26%, respectively.

Hang Seng Index

The Hang Seng Index fell by 0.21% on Tuesday. The Hang Seng Tech Index (HSTECH) declined by 0.87%. Property stocks also saw losses. The Hang Seng Mainland Properties Index (HSMPI) ended the day down 0.84%.

Alibaba (9988) and Tencent (0700) fell by 0.85% and 1.53%, respectively.

Bank stocks had another mixed session. HSBC (0005) and China Construction Bank (0939) saw gains of 1.28% and 0.44%, respectively. Industrial Commercial Bank (1398) ended the session flat.

However, JD.com (9618) slid by 3.16% on news of Dada Nexus investigating accounting irregularities.

The Nikkei 225

(Graph for reference purposes only)

The Nikkei rallied 1.16% on Tuesday.

Bank stocks had a mixed session. Sumitomo Mitsui Financial Group Inc. (8316) fell by 0.53%, while Mitsubishi UFJ Financial Group Inc. (8306) gained 0.12%. It was also a mixed session for the main components of the Nikkei.

Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) rallied 2.66% and 3.28%, respectively. KDDI Corp. (9433) and Sony Group Corp. (6758) rose by 0.04% and 1.29%. However, Fast Retailing Co. Ltd. (9983) declined by 0.12%.

For upcoming economic events, check out our economic calendar.